TIC's or REIT's - Sliced, Diced and Served Up in Bowls

Tenant-In-Common (TIC) versus a Real Estate Investment Trust (REIT) Which one is right for me or my client?

First we need to establish two things. In Uncle Sam’s rulebook TIC’s are generally considered real estate. REIT’s are not. Ok, ok for you guys that HAVE to be sooooooo technical, there are securitized TIC's out there and there are real estate based REIT's but these would be the exception rather than the rule.

A Securitized REIT for example would not be the choice for investors seeking the advantages of 1031 exchanges, passive income, depreciation, etc. Generally speaking REIT’s are considered a security and even though the investment is in real estate it is really more like buying a mutual fund. REIT’s are considered portfolio income and losses cannot be deducted from active or passive income.

TIC’s offer investors an opportunity to buy into large property portfolios without the hassles of management and maintenance. However, much like any other real estate purchase there can be issues of liquidity if cash is needed quickly.

Here’s a link to an excellent resource on the subject by the CCIM Institute’s CIRE Magazine.